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Tereos to acquire Napier Brown

1 May 2015

Real Good Food has agreed to sell its sugar distribution subsidiary Napier Brown to Tereos for £34 million. “I am proud of what we have achieved in building the Napier Brown business and expanding its customer base and developing its supply chain,” said Pieter Totté, Executive Chairman of Real Good Food. “However, the changes taking place within […]

Real Good Food has agreed to sell its sugar distribution subsidiary Napier Brown to Tereos for £34 million.

“I am proud of what we have achieved in building the Napier Brown business and expanding its customer base and developing its supply chain,” said Pieter Totté, Executive Chairman of Real Good Food. “However, the changes taking place within the European sugar market mean that the future of this business is best served by it becoming part of an international production group. We believe Tereos is the best choice for both customers and employees. This transaction will allow us to focus all our resources on the continued growth of our remaining businesses. I would like to thank the staff and employees for their contribution over the years.”

In its notes accompanying the announcement of the sale, Real Good Food said that its strategy for its sugar business has always been heavily influenced by the regulatory framework of the EU Sugar Regime. It was initially anticipated that the EU sugar beet production quotas would end in 2020; however, the EU Commission has decided to end quotas from 2017. This decision has profound implications for the EU sugar industry, the company said, noting that Napier Brown, as a non-refining independent business of significant scale, is unique within Europe and reflects the unusual market structure in the UK, where British Sugar and Tate & Lyle are the only domestic sugar producers. Tate & Lyle has been reducing its production and accordingly the UK market has become increasingly in deficit and reliant on imports.

Napier Brown, said Real Good Food, has an important role in providing such imports to the UK market but, in order to operate effectively, it needs to ensure that cost-effective sources of sugar are available to it. The company believes that this requires the direct backing of a powerful producer and therefore Napier Brown has been exploring relationships with a number of sugar producers. It has become increasingly clear that such producers, while attracted to Napier Brown’s UK route-to-market, desire full control of the business rather than a strategic partnership. Consequently, Real Good Food has concluded that a full sale of Napier Brown is in the best interests of the company and Napier Brown. After exploring various options for a sale of Napier Brown, the company has concluded that a sale to Tereos represents the best value for shareholders and therefore has entered into the conditional sale agreement.